Financial Management PAO Regulations 2021 MCQs

PAO Regulations 2021 MCQs cover the newest instrument in this syllabus, which is exactly why candidates underprepare for it. Very little reliable practice material exists.

We built this set from the gazette text as amended up to 27 October 2025, including the Schedule of delegated financial powers where most numerical questions come from.

What These Regulations Replaced

The Financial Management and Powers of Principal Accounting Officers Regulations, 2021 were approved through S.R.O. 285(I)/2021 dated 8 March 2021, in exercise of powers under section 27 of the Public Finance Management Act, 2019.

Regulation 34 repeals the revised System of Financial Control and Budgeting, 2000. The regulations apply to all Federal Government Ministries, Divisions, attached departments and subordinate offices — except Defence Services, for which the Ministry of Defence notifies separate regulations.

Who Becomes a Principal Accounting Officer

Regulation 3 makes the principal accounting officer responsible for all financial matters relating to offices under his administrative control, and the custodian and operator of financial resources.

Regulation 4 sets eligibility. No official may be notified as PAO unless that official is a head of department or subordinate office, an officer controlling a specific budgetary demand for grant, or an officer controlling one or more cost centres where a strategic interest is involved. Where the head of an organisation holds a constitutional position, another senior officer may be designated instead.

Regulation 5 vests the designation power in the Prime Minister, acting on the recommendation of the administrative Secretary of the Division concerned and the Finance Division, notified in the official Gazette.

Regulation 6 makes the PAO accountable before the Parliament of Pakistan, including all relevant Parliamentary Committees, for use of resources and regularity and propriety of expenditure.

Reporting and Reconciliation Cycles

Regulation 7 lists twenty-one specific responsibilities. The reporting cycles are the examinable part:

• Reconciliation with accounting offices on a monthly basis
• Reconciled statement of revenue and expenditure to the Finance Division on a quarterly basis
• Statement of revenues and expenditures of public entities on a half-yearly basis
• A PAO other than the Secretary submits monthly, quarterly and annual reports to the administrative Secretary through the chief finance and accounts officer

Re-appropriation and Surrender Deadlines

Regulation 14 ties financial powers to the PFM Act. Under section 23 of the Act, no authority may incur expenditure until sanctioned by a competent authority and provided for through the schedule of authorised expenditure, a supplementary or technical supplementary grant under Article 84, or re-appropriation under section 11.

The two dates that carry marks are identical and easy to confuse with each other:

• Re-appropriation must be approved by the thirty-first day of May each year
• Anticipated savings must be surrendered to the Finance Division by the thirty-first day of May each year

In exceptional cases of exigency, the Finance Division may extend either limit before the close of the financial year.

The Schedule bars re-appropriation from one demand for grant to another, after expiry of the financial year, between charged and other expenditure, and from Employee Related Expenditure to Non-ERE.

Delegated Financial Powers in the Schedule

We have seen firsthand that candidates skip the Schedule and lose four to five marks. These are the figures that repeat:

Item	PAO	Head of Department	Head of Subordinate Office
Write-off of losses (fraud, theft)	Up to Rs. 10 million	Up to Rs. 1 million	Up to Rs. 500,000
Write-off (breakage, shortage, wastage)	Up to Rs. 500,000	Up to Rs. 200,000	Up to Rs. 100,000
Unforeseen expenditure	Full powers	Rs. 100,000	Rs. 50,000

Rent of non-residential buildings is delegated up to Rs. 1,500,000 per month for Islamabad, Rawalpindi, Lahore, Karachi, Peshawar and Quetta, and up to Rs. 1,000,000 per month for other places.

Three more Schedule facts appear often. A post vacant for three years or more is deemed abolished. A temporary post may be converted to permanent if it has existed continuously for five years or more, and conversions must be reported to the Finance Division before 1 October each year. Final payment of a deceased government servant’s provident fund dues may be authorised without a succession certificate up to Rs. 50,000.

Chief Finance and Accounts Officer

Regulation 31 governs the CFAO. The post is filled by a BPS-20 officer, and where BPS-20 officers are unavailable, senior officers of the Pakistan Audit and Accounts Service in BPS-19 may be considered in their own pay scale.

The initial posting is for not less than two years, extendable by another two years. After transfer, the officer cannot serve as external auditor for that Ministry or Division for three years. Following the October 2025 amendment, the posting is notified by the Establishment Division as recommended by the Finance Division.

Regulation 33 covers the chief internal auditor, appointed under section 29 of the PFM Act, in BPS-19 or 20, also for a period of not less than two years extendable by two.

Practice: PAO Regulations 2021 MCQs with Answers

1. These regulations were notified vide:
(a) S.R.O. 432(I)/2004 (b) S.R.O. 285(I)/2021 (c) S.R.O. 799(I)/2021 (d) S.R.O. 2019(I)/2025

2. They were made under which section of the PFM Act, 2019?
(a) Section 11 (b) Section 23 (c) Section 27 (d) Section 29

3. These regulations repealed the:
(a) General Financial Rules (b) System of Financial Control and Budgeting, 2000 (c) Treasury Rules (d) Rules of Business, 1973

4. Who designates an officer as principal accounting officer?
(a) Finance Secretary (b) Cabinet (c) Prime Minister (d) Auditor General

5. A PAO is accountable before:
(a) The Cabinet (b) Parliament and its Committees (c) The Finance Division (d) The Auditor General

6. Re-appropriation must be approved by:
(a) 31 March (b) 30 April (c) 31 May (d) 30 June

7. A PAO may write off losses due to fraud or theft up to:
(a) Rs. 1 million (b) Rs. 5 million (c) Rs. 10 million (d) Full powers

8. A post lying vacant for how long is deemed abolished?
(a) One year (b) Two years (c) Three years (d) Five years

9. The chief finance and accounts officer is normally in:
(a) BPS-18 (b) BPS-19 (c) BPS-20 (d) BPS-21

10. Minimum initial tenure of a CFAO in a Ministry is:
(a) One year (b) Two years (c) Three years (d) Four years

11. These regulations do not apply to:
(a) Attached departments (b) Subordinate offices (c) Defence Services (d) Autonomous bodies

12. Re-appropriation is barred from ERE to:
(a) Development budget (b) Non-ERE (c) Foreign exchange (d) Charged expenditure

Conclusion

These regulations connect three instruments — the PFM Act, the Rules of Business and the procurement framework. Learn the designation process, the two May deadlines and the Schedule limits, and the paper becomes manageable.

Why Choose Us

We work from the gazette text rather than secondary summaries, which matters here because the Schedule has been amended six times since 2021.

• Based on the version amended up to 27 October 2025
• Schedule-based numerical questions that other sources omit
• Clear separation between PAO, CFAO and chief internal auditor roles
• Cross-referenced with the PFM Act, 2019 sections
• Updated as each new S.R.O. is notified

FAQs

1. Who is the default principal accounting officer of a Division?
The Secretary, under Rule 5(9)(e) of the Rules of Business, 1973, unless another official is notified.

2. Can an officer other than the Secretary be a PAO?
Yes, subject to Regulation 4 criteria and designation by the Prime Minister under Regulation 5.

3. What is the deadline for surrendering savings?
Thirty-first May each year, extendable by the Finance Division in exigency before the close of the financial year.

4. Are PAO Regulations 2021 MCQs asked in audit and accounts exams?
Yes. They appear in accounts, audit and administration papers alongside PFM Act questions.

5. Who assists the PAO in financial management?
The chief finance and accounts officer, who reports directly to and works under the supervision of the Secretary.